Hierarchy and Development in the Russian Arctic

How a community's position in Russia's federal system determines its economic future

This article is part of a series on Russian interests in the Arctic. Russia’s Arctic policies and postures are often misunderstood, overblown, or underrated because they take place in a complex regional context and result from complex internal politics. Every second month, Morgane Fert-Malka contributes with an analysis, interview, or book review shedding light on this central Arctic player.

By Morgane Fert-Malka

All Arctic countries strive to develop their Northern territories and accommodate—ideally in an inclusive process—their local populations. But natural conditions, geography, political culture, and historical legacies make the challenges in the Russian Arctic unique.

Moscow is currently putting the final touches on a bill for the socioeconomic development of its Arctic region. The government puts forward a comprehensive strategy and envisions development in terms of “pillar zones” (main hubs) and “anchor projects” (main drivers of local growth) spread across the Arctic zone. In addition to natural-resource extraction and shipping, the plan emphasizes telecommunications, infrastructure, and the need to ensure sustainable development for local communities.

The plan is ambitious, but it has a certain 20th-century flavor. The approach is top-down and statist rather than stressing multilevel governance, community-driven development, endogenous growth, and cross-border processes—all concepts now entrenched in circumpolar discussions. The Russian approach, in other words, seems to be informed by a different paradigm than in other Arctic countries.

This new bill’s hierarchical style is also seen in Russia’s Northern governance framework. One Arctic economics expert who can help explain it is Alexander Pelyasov, a professor at Moscow State University and a long-time consultant for the Russian government. We spoke about the interaction between large-scale industry, local initiative, and global processes within the specific federal administrative structure of the Russian Arctic.

Morgane Fert-Malka: Professor Pelyasov, what are the characteristics of the Russian Arctic that shape the region’s potential for socioeconomic development?

Alexander Pelyasov: Our Western colleagues often compare the Russian Arctic to Canada’s Northern territories: Both are large, sparsely populated spaces, distinct from the Southern regions in which most economic and demographic hubs are located. But the Russian Arctic is fundamentally different in terms of its administrative organization, which affects center-periphery dynamics and the possibility of community-driven development.

Even if the Russian Arctic is comparable in size with Canada, its administrative system is closer to Scandinavia in terms of density and structure. The primary motivation for setting up the Russian Arctic in this way was national security and defense: As early as the 1930s the Soviet state organized the most geopolitically sensitive areas—first Murmansk [on the border with Norway and Finland], then Chukotka [the easternmost province, near Alaska] in the 1950s—into tight administrative grids. In subsequent decades, this regime was replicated in the rest of the Russian Arctic. The result was a complex and comprehensive administrative grid (rayonnaya setka), which for decades has been the framework through which policy is applied. This includes, for instance, the system of workplace benefits, which was part of a Soviet labor policy aimed at attracting migrants to the North, as well as the delivery of critical supplies by river or sea to areas where roads to mainland Russia were not always passable.

In concrete terms, this administrative grid translates to complex dynamics between centers and peripheries. This does not simply refer to the Russian Arctic as a periphery to Moscow; rather, each Arctic town, settlement, and community is defined in relation to the nearest administrative hub. A community’s distance from this hub, and the intensity of the economic exchanges between the two, determines the community’s space to maneuver and potential for socioeconomic development.

MFM: It seems like the metaphor of multiple solar systems could apply. Does that leave any room for local initiative and growth within each of these systems?

AP: There are different types of communities in the Russian Arctic: large urban centers; secondary urban settlements that are part of an agglomeration; demographic “islands,” which are isolated from urban centers either by distance or the absence of roads; and actual islands. Depending on its geographic and administrative position within this system, a community will rely on internal or external factors—or a combination of the two—for its development.

Take, for example, the urban hubs Noyabr’sk in central Russia, Magadan in the east, and Apatity in the west. With populations between 50,000 and 110,000, they are very large by Arctic standards, which means these cities have significant local human resources, as well as external investment, federal attention, and integration into global markets. Therefore, when we talk about the development strategies of these cities, we consider the interaction of endogenous and exogenous growth factors. So-called mono-cities—those that rely on a single industry, often overseen by a single giant corporation—I would put in the same category. To some extent, their development also depends on the creativity and entrepreneurship of their local populations, in addition to factors like investment, global market prices, and federal budget allocations. However, because of various cultural legacies, mono-cities are more path-dependent and inward-looking in their development than the Arctic hubs.

For small communities, the picture is different. Settlements located near a large agglomeration (within 60-75 miles) tend to be in a state of complete economic dependency. Local initiative is smothered, eclipsed by directives from above. Growth is therefore determined by outside forces—not rooted in global processes, but the local processes of the nearest urban center. For instance, the mono-city Muravlenko (with 30,000 residents) is located near the larger hub of Noyabrsk, which completely outweighs it in terms of economic, cultural, and entrepreneurial development. This high level of dependency means Muravlenko has less self-directed internal development. Talented people are drawn to jobs in Noyabrsk, while those in Muravlenko live almost exclusively off of oil extraction managed by Gazprom.

Finally, those communities that are both small and isolated have been mostly driving their own development—that is, they rely on local resources, but out of necessity rather than by choice. Of these, the smaller indigenous communities are sustained by a traditional subsistence economy, and in the larger, non-indigenous settlements, you can find extractive ventures run by local entrepreneurs. Granted, the latter relies on external inputs like market prices, investment, and technologies, but the main impulse comes from within the community.

This administrative structure makes the Russian Arctic a highly heterogenous space. Perhaps surprisingly, for a given community, development opportunities are shaped less by the socioeconomic profile of the region in which it is are located than they are by the community’s position in the administrative grid. Take, for instance, two cities of the same size, like Labytnangi and Gubkinskii. Labytnangi is close to the Yamal capital of Salekhard, and because of this the more energetic and talented people often go to Salekhard for work. Meanwhile, Gubkinskii is far from any major center, and so is obliged to rely on its own human capital—which, in turn, is easier to keep within the city. The atmosphere in the two cities is very different: Gubkinskii has a thriving cultural life, including sport events and local media. By contrast, Labytnangi, being in the shadow of Salekhard, has little going on.

MFM: Does the availability of different types of natural resources affect development patterns as well?

AP: Very much so! Oil and gas are killers of local initiative. The richer the soil, the weaker the stimulus for local creativity and entrepreneurship. Meanwhile, mineral and raw material extraction is less of a curse. Usually it is accompanied by a surge in local initiatives. We observe this in both the Canadian and the Russian Arctic.

Bioresources have traditionally been more organically integrated into local communities’ lifestyles and economic models—in stark contrast with the oil and gas industry, which usually excludes locals from the extraction process and the distribution of profits. Forests, marine resources, and reindeer foster rather than stifle local initiative, unless the quality of the products and proximity to large markets like China or the EU pushes the community into rent-seeking patterns.

MFM: How have Russia’s Arctic communities engaged with ideas of sustainable development and the global marketplace?

AP: First, you have to understand the state of mind among Russian Arctic communities. In 1991, the longstanding project of “socialist” sustainable development crumbled and was replaced by 27 years (and counting) of constant and profound societal transformations. Combine this with the manifestations of climate change, and you may say that the reality in these communities has been one of successive cataclysms and permanent turbulence. In particular, they have had to deal with the abrupt transition from a completely statist universe to a radically capitalist one—something no other Arctic country has experienced.

Many communities in the Russian Arctic are only remotely and indirectly connected with global processes, because of both their geographic isolation and federal budget policy. Nowhere else in the circumpolar Arctic is there an equivalent dynamic: An enormous share of the wealth created in the Russian Arctic (especially in the oil and gas industry) is diverted from the region, and in turn subsidies and investment are sent back to Arctic territories. Russia’s Arctic policy remains federal and vertical. Everything goes through Moscow and then through regional centers, so most communities have little space to develop and integrate global markets autonomously.

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Morgane Fert-Malka is a French freelance political analyst based in Moscow, Saint Petersburg, and Copenhagen. She focuses on Russia’s Arctic policies and on international relations in the Arctic. In addition to her doctoral research on Russian decision-making processes in the Arctic, she is committed to deciphering the complex and fascinating issues of international Arctic governance for the broadest possible audience. Twitter: @CuriousArctic.